How to

How to Set Up a Depreciation Schedule on a Bill Line

You buy a $14,000 well pump.

Entered as an ordinary bill, that lands as one month’s expense — a $14,000 hole in a single month for a machine that will run for a decade. The month it was bought looks terrible and every year it actually serves looks free.

Depreciation spreads the cost across the years the thing is useful, which is the period it is actually earning you anything.

Before you start

  • The bill entered, with the equipment on its own cost line.
  • A Depreciation Expense account — where the periodic cost lands.
  • An Accumulated Depreciation account — the contra-asset account that is credited. This is not the same as the asset account, and the distinction matters; see below.
  • A useful life decided. BasicBMS will not choose one for you, and it is a judgement call your accountant should make, not your software.
  • None of the periods can fall in a closed month.

Steps

  1. Open the bill and find the cost line for the equipment.

  2. Choose Defer on that line. The schedule opens with the account and amount already filled in.

  3. Set the debit account to your Depreciation Expense account and the credit account to Accumulated Depreciation.

  4. Choose the frequency — monthly, quarterly or annual — and the number of periods that matches the useful life. Ten years of annual depreciation is ten periods.

  5. Read the preview table. Every period, its date and its amount, before anything is saved. It is computed by the same routine that writes the entries.

  6. Save the schedule.

What posts behind it

Nothing until a person releases a period. Each release is one balanced entry:

On releasing one period
 AccountDebitCredit
DRDepreciation Expense100.00—
CRAccumulated Depreciation—100.00
Balanced100.00100.00

Note what is credited. Depreciation credits Accumulated Depreciation, a contra-asset account — it does not touch the asset account that holds the original cost. The asset stays on the books at what you paid; the contra-account grows alongside it, and the two net to the current book value.

The effect on the balance sheet is the one you want: in our verification run, releasing a $100 period reduced total assets by exactly $100, and the balance sheet still footed. A system that debited an expense without crediting a contra-asset would show the expense while leaving assets inflated — the classic way depreciation gets recorded wrong.

Due periods appear on the Unposted Items report until someone acts on them, and Post All Due releases the ones that have come due. A backlog posts as separate entries on their own dates, not as one lump dated today.

When it won’t let you

Period 2 is dated into a closed accounting period (Feb 2026). Reopen it, or re-date this period. Closed means closed. The release stops and zero ledger rows are written.

$0.05 does not divide into 12 periods of at least $0.01. The amount will not split that many ways. A schedule that cannot post is refused at the point you would have created it, rather than failing later.

What this doesn’t do

Read this section before you rely on any of it.

This is not a fixed-asset register. Depreciation attaches to the bill line that bought the thing. There is no asset record, no cost basis tracking, no salvage value, no disposal handling, and no per-asset accumulated depreciation.

Straight-line only. No declining-balance, no units-of-production, no MACRS or other tax-basis methods.

A schedule cannot be re-amortized mid-life. You can stop it — the remainder is written off in one entry, and the released total still foots to the original amount — but you cannot reshape one that is already running.

If you need a full asset register with salvage values and disposals, that is not here yet. We will say so when it is.

Related

Stuck on this one? Call (509) 949-2162 and we’ll walk through it with you.

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